A Community Interest Company (CIC) is a limited company with special features to ensure that it works for the benefit of the community.
A CIC operates in the same way as any other company and has all the usual characteristics, such as a separate legal entity, the ability to enter into contracts and own assets in its own name, flexibility in borrowing and fundraising.
In addition, it:
- Can support a wide range of activities, small to multi-million-pound services.
- Can be a useful legal form to hold local assets such as community halls and facilities, as well as for trading in a conventional sense through provision of goods and services
- Has one or more directors – although charitable funders require 2/3 unrelated directors
- Has directors who can be paid or unpaid, and who have the same rights and duties as any other directors
- Must satisfy the CIC Regulator who will carry out a ‘community interest test’
What are the benefits of a CIC?
- Greater flexibility in terms of activities
- Limited liability for directors (nominal amount, usually £1 each)
- Directors can be paid
- Access to some grants
- A lighter regulation than a Charity
- Reassurance to stakeholders, as the asset lock and community purpose are regulated
- Quick, easy and inexpensive to set up
Considerations prior to setting up a CIC
- CIC name (check availability on Companies House)
- Type of structure – Limited by Guarantee rather than by shares if you will be looking for charitable grant funding
- Type of membership – small or large
- Number of Directors (minimum of 3 required for most funders)
- Standard Industrial Classification of economic activities (SIC code)
- People with significant control (PSC)
- Financial year start date
More info here
